September 12th 2007
By "G-II" Varrato II, Realtor®, Retired USAF Red Horse 820th CESePRO 500, ABR, RECS, Mentor
Coldwell Banker Residential Brokerage
We have all been tracking the increasingly frustrating real estate market. As Real Estate Practitioners for nearly two decades, we can tell you that this is, by far, the most frustrating of all of the down-trend scenarios we have experienced. The boom years, the period of time I refer to as "the nutty period", 2003 to 2005... came to an abrupt halt around July/August 2005. Lori and I have been through this type of down-turn in market conditions two times in prior years. We have abundant experience in dealing with these types of market conditions. The real estate industry is a cyclical animal. By that I mean, values go up and values go down; prices go up and prices go down and interest rates go up and interest rates go down. This is the nature of the beast. That said, the sharp course change from the upward out-of-control spiral to the nose dive... plummeting toward the center of the earth, we have all endured... is the fastest reverse direction we have ever seen.
In today's real estate market, when REALTORS® search the MLS system here in the Valley, we find over 60,000 homes available for sale on any given day. For buyers in today's market, they have the pick of the litter. Buyers are taking their time to make a decision. They are in no hurry to pull the trigger.
Unfortunately, for sellers, this is a frustration that is almost unbearable. Sellers are feeling the degradation of their property value. However, industry analysts, suggest that what is truly taking place not actually value degradation, but rather a correction of real estate values back to a point of sanity. Many of us have listened to the following scenario from friends or sellers in today's market; "My neighbor sold his home in 2005 for $325,000 and today I can't get $250,000 for my house." This story plays over and over again from community to community and from price point to price point.
Real estate market industry analysis's predict that the market price/value index could soften yet another 5% or more over the next 12 months. If this is true, buyers who are in the market for a home should begin their search within this time frame. Buying at the bottom of the market is always the a logical time to make a purchase; and the bottom of the market only shows its head about every seven to ten years. That is the approximate life span of an upward cycle trend in the real estate market. Remember, what goes up, will always come down and what comes down will ALWAYS go up.
Sellers who are selling in a down-trending real estate market should consider if they truly need to sell. If they do not, then they should get out of the market until the dust settles. However, if the seller is in a MUST SELL mode, then the seller will also have to embrace the reality of the market conditions. The seller will have to realize that he/she/they are not going to get prices that paralleled that of their friends a few months or a few years back. Seller's should however be able to get top dollar for their property. Top dollar does not necessarily mean that he/she/they will score a home run like their friends and neighbors a few months/years ago, but it does mean that, properly represented, the seller should be able to squeeze every dollar available... out of their home... that the market will support.
In today's real estate market, here in the Valley Of The Sun a.k.a. the ARMLS (Arizona Regional Multiple Listing Service) area we have over 60,000 homes for sale, including those that are in the pending category. About 63,000 licensees practice their real estate craft in this area. The ARMLS area hosts about 4,000,000 people, covering an area of about 213,700 square miles. In this entire area, in the month of August 2007 only 3,930 home sales contracts closed. In the first ten days of September 2007 in the same geographic demographic area, only 470 single family residential home sales contracts closed. So you see, if you are a seller in today's market and there is no overwhelming compelling reason you are selling now, DON'T! Take your home off the market and let the market conditions finish their adjustment process. If you must stay in this real estate market then it is this REALTORS® opinion that you may be best served by a REALTOR® who has been in this industry over 10 years. REALTORS® with this type of experience have weathered this "Perfect Storm" before. An experienced, well trained, seasoned real estate practitioner will know how to help you skipper your transaction through the storm of low-ball offers and unqualified buyers who come to the party with loan officers who have no clue of how to qualify a buyer for a loan.
If you're a buyer in today's market, BUY NOW! The FED is expected to suggest a relaxing of interest rates when the FED speaks on Capital Hill on September 18th 2007. If this occurs, and you are a buyer, get off your couch and get yourself a qualified, experienced, tenured, REALTOR® and buy NOW! It is this REALTORS® opinion that REALTORS® who have been in the business over 10 years are best suited to help you through the buying process. Experienced REALTORS®, or at the very least, REALTORS® who are being mentored by experienced, well seasoned REALTORS®, will help you process the intricate nuances of purchasing your home. Let's face it; you are not buying a head of cabbage. You are going to allocate time, energy, emotion and money into, perhaps the single most expensive investment of your life time. Do you really want to be tromping around this swamp with an inexperienced guide? Confucius say: "Man who foolishly embarks on a journey without a guide, is soon lost and bewildered."
Be wise! Be certain of your mission! Be diligent in who you select to represent your interests! It's a jungle out there and you don't want to end up shark chum for the buyer if you're a seller or for the seller if you're a buyer.
If you or any one you know is in search for a couple of experienced REALTORS®, be sure to point them in our direction. Lori and I have been teaching and mentoring new agents for Coldwell Banker Residential Brokerage for nearly two decades. We have been involved with processing thousands of transactions in that time. Check out A Report Card for Lori & G-II.